Put underpriced - buy put - buy stock Put overpriced - sell put - sell stock why do you buy and sell stock above in the two cases?
Just remember this: P +S0 = C + X/(1+r). This is the put-call parity. If the left side is < the right side, buy the left side, and sell the right side. If the left side is > the right side, sell the left side, and buy the right side. In your example, put under priced: buy the left side, and sell the right side. In your example, put over priced: sell the left side, and buy the right side…
thank you…